Feldman, Fox & Morgado has initiated an investigation into possible fiduciary duty breaches, as well as other violations of federal securities laws, by officers and directors of Career Education Corporation (NASDAQ: CECO). Career Education Corp. issued a Form 8-K announcing the following:
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) May 17, 2011
Career Education Corporation (the "Company") has received from the Attorney General of the State of New York ("Attorney General") a Subpoena Duces Tecum ("Subpoena") dated May 17, 2011, relating to the Attorney General's investigation of whether the Company and certain of its academic institutions have complied with certain New York state consumer protection, securities, finance and other laws. Pursuant to the Subpoena, the Attorney General has requested from the Company and certain of its academic institutions documents and detailed information on a broad spectrum of business practices for the time period May 17, 2005 to the present.
The August announcement by the CEO of Career Education Corporation has further damaged the reputation of the company by admitting to falsification of recruiting data. President and CEO, Gary E. McCullough, stated that the company has requested outside counsel, Dewey & LeBoeuf, to conduct an investigation into placement rate information gathered by all of the domestic campuses.
The problem, he asserts, is the result of the actions of certain employees verses a company sanctioned practice. "For me, as the leader of our company, these findings I've described are very, very disappointing," he said. "The actions of a few people have let down others who work hard and responsibly every day on behalf of our students."
The actions of these "few people" have landed CECO in several lawsuits and class actions that claim Career Education Corporation's schools have systematically overstated job placement rates. For example, in one San Francisco, class-action the complaint states that the California Culinary Academy's admissions representatives and marketing materials quoted a job placement rate of 97%. Those statistics, however, include a "substantial majority" of the graduate jobs paying $12 an hour or less in roles such as Starbucks baristas, prep cooks, line cooks and waiters.
Following the investigation of for-profit education companies by the GAO (Government Accountability Office), shares in several of these companies including, CECO have fallen. The financial damage to shareholders is allegedly a direct result of the falsification of student recruitment information. This has led to several class-action cases filed by various law firms including cases against Education Management, DeVry, Corinthian Colleges, and Strayer Education.
The Feldman, Fox & Morgado investigation is examining whether CECO officers and directors may have violated securities laws by knowingly issuing one or more materially false and misleading statements regarding its business, operations, budgets, forecasts and future earnings expectations.
If you purchased common stock in CECO between November 2010 and August 2011, Feldman, Fox & Morgado would like to discuss this investigation with you. Call toll free today, 855-4-FFM-LAW. Se habla español.
